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FTC issues report on data broker industry, recommends legislation

On May 27, 2014, the Federal Trade Commission announced the release of a new report entitled Data Brokers: A Call for Transparency and Accountability, detailing the findings of an FTC study of nine data brokers, representing a cross-section of the industry. The Report concludes that the data broker industry needs greater transparency and recommends that Congress consider enacting legislation that would make data brokers’ practices more visible and give consumers more control over the collection and sharing of their personal information.

The Report finds that data brokers collect consumer data from both online and offline sources, storing billions of data elements pertaining to almost every U.S. consumer. In addition, the Report indicates that data brokers share data with each other, and they combine and analyze consumer data to make inferences, including potentially sensitive inferences, about consumers. The Report also notes that, to the extent data brokers currently offer consumers choices about their personal information, consumers may not be aware of those choices.

The FTC recommends that Congress enact legislation to address the lack of visibility into data broker practices, and to provide consumers with increased access and control. In recent years, several bills have been introduced to address these issues, but no federal legislation on the topic has been enacted to date.

The FTC Report takes a different approach from the recent White House data report, “Big Data: Seizing Opportunities, Preserving Values,” which was issued earlier in May. Whereas the White House report discusses both the benefits of data collection as well as its privacy implications, the FTC Report focuses more on potential harms to consumers. The FTC calls for writing into law concepts that have been part of industry voluntary codes of conduct for years.

As we previously reported, in September 2013, Senator Jay Rockefeller (D-WV), Chair of the Senate Committee on Commerce, Science and Transportation, sent letters to twelve popular health and personal finance websites as part of his investigation of the data broker industry. The letters asked the companies to answer questions about their data collection and sharing practices. As reported in Bloomberg BNA, Senator Rockefeller “concluded that the FTC report ‘echoes findings’ of his committee’s recent probe of the data broker industry.”

The FTC voted to approve the issuance of the report 4-0, with Commissioner Terrell McSweeny not participating. Commissioner Julie Brill issued a concurring statement.